Markets Eye Election, ECB, Comey

The euro fell around 0.6% against the dollar and 0.5% against the pound yesterday on reports that the ECB would cut its inflation projections. Euro-dollar held above 1.1200 and later reversed those losses. Sterling-euro regained 1.1500, rising to around one-week highs. Sterling-dollar rose to around two-week highs, breaking above 1.2950.

Previous Day's Market Highlights

The euro fell around 0.6% against the dollar and 0.5% against the pound yesterday on reports that the ECB would cut its inflation projections. Euro-dollar held above 1.1200 and later reversed those losses. Sterling-euro regained 1.1500, rising to around one-week highs. Sterling-dollar rose to around two-week highs, breaking above 1.2950.
 
The Canadian dollar fell against the pound yesterday as oil prices stumbled on an unexpected rise in US EIA crude oil inventories. The rate regained 1.7500, having traded as low as 1.7320 earlier in the day.
 
The Aussie briefly fell against the pound on under-forecast trade data after receiving support yesterday on the back of above-forecast GDP growth. 

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP / EUR 1.1530 1.1929 1.1386 4.55%
GBP / USD 1.2973 1.3048 1.2768 2.15%
EUR / USD 1.1252 1.1283 1.0839 3.94%
GBP/AUD 1.7185 1.7652 1.7059 3.36%
GBP / NZD 1.8012 1.8964 1.7889 5.67%
GBP / CAD 1.7519 1.7822 1.7195 3.52%

Today's Market Highlights

The key event today is the UK’s election. A Conservative victory with a strong majority is the outcome investors view as most likely to strengthen the pound, while a hung parliament poses the greatest risk. A Labour victory may also weaken the pound, although some investors think a Labour win could support the pound in the longer term given the possibility of a softer Brexit.
 
Exit polls around 10pm will give an initial indication of the outcome, and results come out overnight.
 
Other highlights today include the ECB meeting. While no monetary policy changes are expected, there have been reports that the ECB will cut its inflation projections, and Draghi has recently struck a dovish tone. Expectations of a dovish ECB could weaken the euro but may be countered by any less-dovish adjustments to the language used in the Bank’s forward guidance. 
 
Former FBI Director James Comey testifies before the Senate intelligence committee from around 15:00 BST. Comey released his opening statement last night. The testimony is a political risk for the dollar but may have limited impact if there are no surprises.
 
Other releases include weekly US Initial Jobless Claims and Canada’s New Housing Price Index (13:30 BST). The Bank of Canada releases its Financial System Review and BoC Governor Poloz speaks later in the afternoon (15:30, 16:15 BST).

Today's Economic Calendar

Time Currency Release Consensus Previous
24hr GBP UK Election
10:00 EUR Eurozone GDP QoQ (Q1) 0.5% 0.5%
10:00 EUR Eurozone GDP YoY (Q1) 1.7% 1.7%
12:45 EUR ECB Interest Rate Decision 0.0% 0.0%
12:45 EUR ECB Deposit Rate Decision -0.4% -0.4%
13:15 CAD Housing Starts s.a. YoY (May) 205.0K 214.1K
13:30 EUR ECB Press Conference
13:30 USD Initial Jobless Claims (2 June) 240K 248K
13:30 CAD New Housing Price Index MoM (Apr) 0.3% 0.2%
15:00 USD Comey Testimony
15:30 CAD Financial System Review
16:15 CAD BoC Governor Poloz Speaks